Shift in U.S. Home Buyer Behavior: Increasing Willingness Despite High Interest Rates - Bank of America Study
Bank of America study reveals a shift in U.S. home buyer behavior, with 62% now willing to purchase despite high interest rates.
A recent Bank of America study reveals a significant shift among U.S. home buyers, with 62% expressing readiness to purchase properties despite prevailing high interest rates. This marks a notable decrease from 85% six months ago, indicating a growing impatience that is expected to drive future real estate activity.
Matt Vernon, Head of Retail Lending at Bank of America, notes the impact of this changing sentiment in the survey, foreseeing increased real estate activity in the coming months. The Federal Reserve's efforts to curb inflation have led to a 5.25 percentage point increase in the policy rate over the last 20 months. With signs of economic cooling, there is speculation that the rate hikes may have concluded.
Approximately 80% of U.S. mortgages currently boast interest rates below 5%, a favorable contrast to the average 30-year fixed mortgage rates that surged to 8% in October, dissuading potential buyers.
The survey also highlights the willingness of homeowners to sell their existing homes, even if it means taking on higher-interest mortgages. Motivations include finding a property in a more affordable area, securing their dream home, career or family considerations, or pursuing a lower cost of living.
While new-home sales experienced a 5.6% drop last month due to escalating mortgage rates, Americans' pent-up demand for homes is expected to drive future sales. Bank of America is prepared to meet the anticipated surge in demand, utilizing internal resources to facilitate improved market conditions.